Falling London luxury property prices set to continue
Luxury homes in central London are forecast to fall by 4 percent this year before stagnating for almost two more years - mostly due to Brexit uncertainty. This could mean opportunity for potential London property investors to take advantage of slowed down prices to find a foothold in the market.
Luxury real estate agent Savills predicts prices will only start to move upwards again at the end of 2019, rising by 2 percent. In 2020, this should ramp up to 8%, analysts say. This recovery is a year longer than the firm originally predicted, and they’re blaming heightened political uncertainty as it becomes apparent just how complicated Brexit negotiations will be.
Central London property prices fell by 3.2 percent between January and September this year, taking them down to 15 percent below their 2014 peak. Sellers are now lowering their prices, and the number of £1m+ properties doing so has doubled in number.
However, the dip is only temporary. Savills forecasts that prices will grow by 20 percent over the next five years: a more subdued growth rate, but perhaps more sustainable.
Overseas buyers are also reluctant to buy due to higher capital gains taxes and inheritance tax, added to the increases in stamp duty.
Savills predicts that due to Brexit, London City will lose around an eighth of its 350,000-strong workforce over the next few years. However, the firm believes London will remain a global mainstay of the financial industry, and will become one of Europe’s key technology hubs.
As well as Brexit, there are other factors pushing people out of London. High prices are sending people in their 30s out of the city, to its home counties or even further afield to centres like Liverpool, Manchester and Birmingham in search of more affordable homes. It’s estimated that between 2011 and 2016 the number of people moving out of London grew by 27 percent
Property UK sales director Mert Altinisik says he can’t blame them. “If you’re a buyer with £1 million in your pocket, you can buy 1200 square feet of property in Wandsworth. In Liverpool you could buy a home with four times that amount of space for the same figure.”
Demand from Londoners is helping push prices up in other UK centres, Mert adds. “Liverpool and Manchester prices are strong, and as well as the infrastructure development that’s helping prices, it’s definitely in part due to a demand from people seeking an alternative to overpriced London property.”
That’s not to say London is a write-off for the average investor, he continued.
“There are a number of places for investors to focus on outside the centre of the city,” he says. “If you look at areas where regeneration is taking place you’ll find plenty of opportunities for investment and lifestyle property.”